Savvy cardholders should work to maximize their perks and rewards throughout the year. If you’re using a cash back credit card, it’s important to understand how to get the most out of your cash back rewards. Keep reading to level up your cash-back savvy and learn how to optimize your rewards strategy.

1. Evaluate your spending habits and find a card that suits you

Before you switch up your credit card spending strategy or consider applying for a new credit card, it’s important to analyze your cash flow. How much money are you spending per month? Per year? What categories do you spend the most in? What do you ultimately want or need from a rewards credit card?

Start by using a budgeting app or a pen and paper to figure out how much you spend each month and on what. Whether you’re feeding your soul with home cooking or racking up travel miles in your car or with your favorite airline, make sure you understand where your money is actually going so you can choose a card that will reward you for spending you’re already doing.

Understanding how much you spend will help you anticipate what your rewards yield will be each year (often higher the first year if your cash back card has a bonus offer) and therefore whether an annual fee is worth it. If you don’t actually spend enough money on a credit card each year to offset the card’s annual fee, that card is probably not the best option for you.

Once you’ve noted how you’re using your credit card, you can identify which type of card will best suit your lifestyle and existing spending.

Common spending categories

The best type of card for everyday spending is generally a flat-rate cash back card, as you’ll earn the same rewards rate no matter what you buy. While 2 percent cash back makes a lot of sense, a card with a slightly lower flat rate may offer additional perks that make it a better fit for your spending.

If you spend a lot on dining out or takeout, there are a number of cash back cards with generous rewards on dining and entertainment purchases. If your biggest spending is on groceries to cook at home, you may be best served by a card with a specific rewards category for spending at supermarkets. Further, a card focused on rewarding gas purchases makes more sense if you have a long commute or frequently take road trips.

2. Choose a card with a solid sign-up offer

If you’re in the market for a new cash back card, do your homework to make sure you’re getting a great cash back card welcome offer with a minimum spending requirement you’ll easily be able to meet.

There are plenty of cash back cards with solid welcome bonuses, including:

3. Find cards that offer bonus cash back in your biggest categories

Once you’ve determined where you actually spend your money each month, you’ll want to apply for the cash back card that pays you the best dividends for your own personal finance habits. For example, if a large percentage of your money goes to groceries each month, you’ll want to match your spending with the right cash back card. For example, the Blue Cash Preferred® Card from American Express offers cardholders 6 percent cash back on spending at U.S. supermarkets (on up to $6,000 in purchases per calendar year, then 1 percent).

4. Diversify your spending strategy

There are a few steps you can take to make sure you’re getting the most out of each of your credit cards.

To start, you shouldn’t play favorites with your cash back cards. It’s smart to not focus all your cash back earning on a single credit card. While it’s great that you earn 6 percent cash back on U.S. supermarket purchases (on up to $6,000 per year, then 1 percent) with the Blue Cash Preferred Card from American Express, you don’t need to settle for just 1 percent cash back on most other purchases. Keep a second card in your wallet, like a 2 percent flat-rate cash back card you can use for your spending that doesn’t qualify for a higher-earning bonus category.

Do some research on all your cards and identify what each is best for. Add a small label to your card as a reminder of what to use it for, give each card a helpful nickname in your digital wallet or slip a hand-written legend into your wallet so you’re prepared to use the right card at the right moment.

5. Register for quarterly bonus categories

If your cash back card has rotating bonus categories, keep an eye on your issuer’s cash back calendar and activate bonus categories each quarter. This way you’ll be eligible for the bonus cash back rate. Otherwise, you’ll only earn the base rate, usually 1 percent on all your spending.

The Discover it® Cash Back, for example, earns 1 percent cash back on all non-category purchases, but also offers 5 percent cash back on up to $1,500 in activated rotating bonus category spending each quarter (then 1 percent). Make sure you’re enrolled in these offers and max them out whenever your spending allows.

6. Make the most of special offers and shopping portals

If you want to earn more cash back, combine your favorite cash back credit card with a handy shopping portal. You can often earn more rewards on every online purchase you make by clicking through a shopping portal for your favorite store, then paying with your favorite cash back card.

Cash back apps and sites like Ibotta, Rakuten (formerly Ebates) and Dosh give you a percentage of your spending back on qualifying purchases — on top of the cash back you’re earning on your credit card.

Before you shop, whether in-person or online, look out for card-linked offers from your credit card issuer. For example, Amex Offers and Chase Offers provide cardholders of each issuer with opportunities to earn additional rewards on purchases with select retailers. These offers are normally found in your online account, have limited redemption windows and need to be opted in to individually.

7. Use your cash back wisely

Using your cash back rewards wisely is just as important as maximizing your cash back earning opportunities. Many people choose to use their cash back rewards as statement credits to offset their monthly spending, but getting a rebate on money already spent isn’t the only option. Pay yourself forward with your cash rewards by saving up for a big purchase you might not otherwise buy, or invest your returns each month and let your cash back pay you longer-term dividends for the future.

The bottom line

If you take a little time to spend strategically, you’ll be raking in cash back rewards before you know it. You can maximize your cash rewards by using one of the best cash back credit cards on the market for as many of your everyday purchases as possible.

In the meantime, you’ll also want to avoid carrying a balance so you won’t have to pay interest on your purchases. With the average credit card APR currently over 19 percent, racking up rewards won’t make any sense if you also rack up long-term debt.